HOUSTON-Harris County Appraisal District’s (HCAD) assessment of property taxes has a discriminatory effect against African Americans, according to an analysis done by O’Connor & Associates

Property taxes are one of the largest expenses for low-income home owners.

“The continuing pattern of HCAD’s overvaluing residential property in terms of true market value particularly in minority neighborhoods is shocking,” Firm President Pat O’Connor said. “A disproportionate number of the zip codes that fall 3 standard deviations above the median level of assessment have high levels of minority population. The chance of that happening randomly is almost zero.”

O’Connor & Associates compiled an analysis of over 11,100 sales which occurred during October 2013 through March 2014. The survey was comprehensive and included records for which a sales price and a 2014 Harris County Appraisal District market value were available.

The Houston-based property tax consulting firm is the only firm that represents property owners of any value in volume, representing over 100,000 home owners.

This pattern has been occurring for at least five years.

Houses in primarily African-American Zip Codes are seven times more likely to be over-taxed by at least 10% than homes in primarily Anglo Zip Codes. This could violate the Texas Constitution’s requirement of uniform and equal taxation and may violate the Fair Housing Act of 1968.

HCAD is the appraisal district which estimates property tax values in Harris County, the largest county in the Houston, Texas metropolitan area. They value more than 1 million homes and 1.6 million total properties.

The most egregious example is Zip Code 77028.

Property taxes are well in excess of what is fair in Zip Code 77028, which is 72% African-American. The typical home is paying 87% in excess property taxes, based on a study conducted by O’Connor & Associates.

“This is not an isolated incident,” he said. “Homes in primarily African-American Zip Codes are seven times as likely to be more than 10% over assessed than homes in primarily Anglo Zip Codes. Seven of ten Zip Codes with homes more than 10% over-valued are primarily African-American and Hispanic.”

There are several reasons why it is in HCAD’s interest to ignore the problem: 1) few minority and poor home owners protest, 2) it is not a priority since no one is paying attention and 3) it helps with the ratio study which is an important test for the appraisal district, a key measure of appraisal district performance.

There are several serious consequences of excess taxation of homes in African-American areas.

First, it increases the level of foreclosures as mortgage payments are artificially increased by the excessive taxes. Second, it has led to a meaningful loss of wealth in the African American community. Even homes owned free and clear are being foreclosed as home owners are unable to pay the excess taxes.

“In coordination with the Houston Black Real Estate Association, I requested to meet with senior HCAD management several times to address this issue early in 2014 before values were released. However, by not responding to the requests, they declined to meet”, according to O’Connor. “HCAD’s decision not to meet to discuss this serious problem is very troubling.

The Texas Constitution requires “Taxation shall be equal and uniform”. HCAD is required by state law to fairly tax all property owners, and this must be their most important objective. There is a historic and incontrovertible record of HCAD assessing excess property taxes in minority communities.

“This is unacceptable and should be resolved immediately”, according to O’Connor. “Systemic over-taxation of African- American areas may also be a violation of the Fair Housing Act of 1968.”

“Most firms want to handle only large commercial businesses or wealthy home owners’ protests,” said O’Connor said. “Helping the small guy part of our mission, and in this case, it’s the lower-end home owner who is really getting the raw deal.”

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